PPI disputes lead to 1,000 more jobs at ombudsman

About 1,000 more staff will be employed to deal with a surge in complex complaints about payment protection insurance (PPI) mis-selling.

The Financial Ombudsman Service said it expected to deal with a record 245,000 PPI cases in the 2013-14 financial year.

Its total workload is predicted to rise by 45%, prompting the recruitment campaign.

Consumer groups say the PPI saga is the UK's biggest financial scandal.

PPI was designed to cover loan repayments if the policyholder became ill, had an accident or lost their job.

However, the policies were mis-sold on a huge scale to those who did not want or need it, or would have been unable to make a claim.

UK banks and some building societies face a total bill of around £13bn to deal with the scandal, and some suggest that the figure could rise further.

People who believe they were mis-sold PPI initially make a complaint to the institution that sold them the policy. However, if this compensation claim is rejected then they have the right for a free settlement by the financial ombudsman.

PPI cases will account for about two-thirds of the ombudsman's workload in 2013-14, it predicted, with the cases becoming "complex and harder-fought" as time goes on.

As a result it will take on 1,000 more case workers to deal with them.

"While we see some businesses using complaints positively to improve customer service, many continue to frustrate their customers with delays and inconvenience," said Tony Boorman, deputy chief ombudsman.

"Two years after the court ruling confirmed the approach that financial businesses should take when handling PPI complaints, it is disappointing that we're still seeing significant numbers of unresolved disputes about mis-sold policies being referred to the ombudsman."

The consumer group Which? said: "The banks must deal with complaints fairly and help consumers claim back the compensation they are due without hassle.

"The rise in complaints to the financial ombudsman shows that some banks are still not making it as straightforward as they should for people to get back the money they are rightly owed."

The work of the ombudsman service is funded by a levy on the financial services industry. This will rise from £17.7m to £23m in the next financial year to reflect the higher PPI volumes, with those facing the most complaints paying the biggest share.

A spokesman for the British Bankers' Association, which represents the UK's major banks, said: "Banks are committed to handling PPI complaints as efficiently as possible and have staffed-up to manage the complaints process. Given the high levels of complaints being made and the backlogs that the ombudsman is experiencing, we recognise the need to resource it appropriately.

"All of the UK's High Street banks have committed publicly to ensuring a decisive end to any bad practices which resulted in mis-selling. Banks are overhauling their incentive structures for frontline staff, rewarding staff for high levels of customer service and not sales volumes."